Will big law firms and their partners benefit from the new Republican tax plan promoted by President Donald Trump?
The deduction only benefits people who itemize on their federal tax returns. It would also lower the top individual tax rate, paid by high-earning American individuals, from 39.6 percent to 35 percent.
Still, that's chump change in comparison to the tax windfall he hopes to bestow upon himself by cutting the top tax rate on the bulk of his income by more than half, from almost 40 percent to 15.
US President Donald Trump today said that under his administration, the era of economic surrender is over and the rebirth of American Industry has begun.
Corporations, meanwhile, would see their top tax rate cut from 35 percent to 20 percent.
Trump's long-anticipated overhaul lacks key details essential for meaningful evaluation, including how to pay for it and how the benefits would be distributed between the poor, middle-class and wealthy. Overall, Trump's tax cut is big enough to raise Americans' after tax incomes in 2018 by 2%.
The plan would set a new 25 per cent tax rate for "pass-through" businesses, which are usually small, private enterprises, such as partnerships and sole proprietorships.
"That's because they're in a lower tax bracket under the proposed plan". However, the popular mortgage-interest deduction and deductions for charitable giving would remain, as would incentives for retirement savings plans.
Tax experts told CNBC that it would be hard for Congress to exempt such partnerships from the pass-through rate.
According to initial analyses from city and state lawmakers, business leaders, and tax policy experts, the combined effect of the still-vague plan could wind up costing the average New Yorker thousands of dollars.
The loss of deductions for a NY partner will be more painful, than a Florida partner, he said.
The tax plan will also offer a larger child tax credit-up to $1,000 per child under 17-increasing income limits so more families will be eligible for the child tax credit, and the marriage tax penalty will be eliminated.
What's not discussed is if there are any other revenue raisers for the government under contemplation, he added. And U.S. firms that have accumulated assets overseas would be able to bring them home with a one-time tax, payable over several years. Then it must be debated by congressional tax-writing committees.
Last week, Corker struck a budget deal that would give tax writers room to claim that up to $1.5 trillion in tax cuts will pay for themselves.
The resolution is vital to plans by the Republicans to move tax legislation through the Senate, which they control by a slim 52-48 majority, using a parliamentary process that lets them pass legislation without a customary 60-vote threshold that would necessitate some Democratic support.